The Economy in 2021
Hey Taylor: Everything has changed a lot over the last year, and it feels to me like the economy is still kind of fluctuating. Any idea how things will look this year? What changes might be permanent? — Rebecca
Hey Rebecca: Of all the things that seem out of reach, permanence tops the list. I won’t go so far as to make any long-term declarations, but I definitely have my eye on a few industries to see how recent events shape them going forward.
1. Groceries. The novelty of food delivery wore off a long time ago, but the trend went from convenience to necessity overnight and I don’t expect it will go back as quickly. Everyone likes the option of having food brought to their home, and now that the infrastructure is in place, stores can make an extra buck with delivery and pick-up orders and people can save time on shopping without paying too much for the luxury. This pandemic has obliterated a lot of stigmas, especially when it comes to how fancy you have to be to have groceries brought to your home.
2. Fashion industry. Expensive clothing has always been a luxury, and with in-person activities put on hold for so long, money spent on fashion dropped tremendously. There’s sure to be a bit of a rebound when regular life resumes, but I wouldn’t be surprised if clothing retailers are forced to cut corners to keep business going even after offices, bars, and restaurants get back to capacity. In contrast, home furnishing spending has shot up. It won’t be the most obvious economic shift, but what goes away in terms of business attire and non-essential clothing spending might get replaced by home office upgrades and bulk sweatpants purchases.
3. Real estate. Contrary to what you might believe, real estate spending has continued its upward trend during the pandemic. This came as a surprise to a lot of people who predicted the summer would be a disastrous time for the housing market. In a lot of ways, I think this is good news since we’ve seen how bad a real estate crash can be for the whole economy. It’s a little concerning, however, since we have a wealth disparity and affordability problem when it comes to housing. Unemployment numbers still aren’t great and we’re definitely not out of the woods yet, so real estate issues could still show up in the coming year.
This has been an incredibly difficult year for so many reasons. It’s hard to say what will come next, but a thoughtful look toward the future might be the best way to keep your head up. Hope this year treats you well!